Sound The Trumpet : Sarkozy to Press for 'tobin Tax'

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“Sarkozy to Press for 'tobin Tax'”
by BBC News
September 20th, 2009

French President Nicolas Sarkozy will urge fellow G20 leaders to introduce a special tax to reduce risky behaviour by banks, the BBC has learned.

Mr Sarkozy wants a levy known as a Tobin Tax to be applied to every financial transaction.

The move is aimed at cutting excessively speculative trades and encouraging long-term decision-making.

But senior EU officials told the BBC that the chances of getting a global agreement were "less than minimal".

The proposal does not yet have the formal backing of the EU or Germany - France's largest trading partner - and according to the BBC's business reporter Joe Lynam, it is widely expected to face resistance from Britain and the US, home to the world's largest financial centres.

The BBC has also learnt that the issue of bankers' pay, especially bonuses, will also be on the agenda at the G20 meeting in Pittsburgh, the US, next weekend.

There will be no suggestion of capping individual bonuses, our correspondent says, but it is likely that overall bonuses as a proportion of a company's earnings could be restricted.

There may also be a possibility of payment deferral and the option of clawing payments back should decisions by bankers prove to have been excessively risky or erroneous.

Old idea resurrected

The Tobin Tax is named after the US economist James Tobin, who first suggested it in the 1970s.

While it was originally supposed to be used for aid for developing countries, it could now be used to fund some of the bailouts in the financial industry or the multi-billion dollar stimulus packages under way to kick-start economies around the world.

The idea was resurrected in August this year by Lord Adair Turner, the chairman of Britain's financial watchdog, the FSA, as a way of providing buffers against another economic slowdown.

"Such taxes have long been the dream of development economists and those who care about climate change - a nice sensible revenue source for funding global public goods," Lord Turner told Prospect magazine.

According to our correspondent, the notion of a Tobin Tax is likely to be referred by the G20 to the Financial Stability Forum - the club of the world's top central bankers and financial regulators - to assess and translate into a workable set of rules to which all countries might be able to agree.

But its proponents face a tough battle.

Speaking in Brussels last Thursday, British Prime Minister Gordon Brown voiced doubts about whether a worldwide tax was practical.

"If one or two countries refuse to adopt a common levy or action or taxation, then it makes it very difficult to implement," he said.

"If flows are under supervision in one set of countries, but not under supervision in other countries, then it makes it easy for people to avoid the action that even is agreed by most of the countries in the world."

Art's Commentary......This could be the start of a world system of taxation.

Looking for His glorious appearing! Titus 2:13